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Customers: satellite TV is the best of a bad bunch

New customer satisfaction numbers show that satellite beats cable in customer …

When it comes to customer satisfaction, satellite TV service tops cable—but neither one is doing so hot. According to the American Customer Satisfaction Index, which released new numbers today, cable and satellite providers are all doing a mediocre job, and customer approval is low... and dropping.

We talked about the ACSI numbers from the first quarter of 2006 when we looked at this issue last year. At that time, several of the companies looked to be making progress, with DIRECTV and Comcast both boosting their scores from 2005. In the year since, things have gone downhill for the major players. DIRECTV, Time Warner, EchoStar (owners of DISH), and Comcast all dropped, some of them significantly, and the other listed companies stayed even.

How bad are things in TV land? According to Dr. Claes Fornell, who oversaw the research, cable and satellite companies have a combined satisfaction index of 62, "the lowest level of customer satisfaction among all industries covered by ACSI." He attributes the problems in the industry largely to a glut of new cable customers in the wake of Adelphia's dissolution, which dragged down cable scores as the companies were unable to provide the same (already mediocre) level of service in the short term. Over the last 12 months, for instance, Comcast's score plunged by seven percent.

Fornell also uses the "M-word," saying that "there seems to be an element of monopoly-like pricing in the cable industry" as the cost of basic cable jumped five percent last year and almost 100 percent over the last ten. In industries with actual competition, this would mean that those with low satisfaction scores should start losing money. Not so with cable. Fornell points out that Comcast has one of the lowest scores in the entire survey, that its score dropped by seven percent, but that its revenue grew by 12 percent last year.

The only companies in the industry to post customer satisfaction gains were those lumped into "all others," and their combined score jumped by 4.8 percent this year. When it comes to satisfaction, the smaller companies appear to be outmaneuvering their larger competitors, though their combined score is still lower than the two satellite providers.